Practice Questions Series 79 4/13 || Questions and 100% Verified Answers.
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Practice Series 79 4/13 |
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Practice Series 79 4/13 |
Assume the market S&P has increased 15% in value this year. XYZ Corp. Stock has increased 50% during the same time period. An investor who believed XYZ Stock would be a good investment now would be correct answers attempting to invoke a "Price Momentum" investment strategy.
A "Price Momentum" in...
Practice Questions Series 79 4/13 || Questions and 100%
Verified Answers.
Assume the market S&P has increased 15% in value this year. XYZ Corp. Stock has increased
50% during the same time period. An investor who believed XYZ Stock would be a good
investment now would be correct answers attempting to invoke a "Price Momentum" investment
strategy.
A "Price Momentum" investment strategy tries to ride stocks whose prices have risen much
higher and faster than the overall market. Given the fact pattern of the question, price momentum
is the best choice.An "Aggressive Growth "strategy is invested 100% in equities with any
dividend payments reinvested in additional equity.
Companies headquartered in more than 50 foreign countries list their common stocks for sale in
the U.S. through American Depository Receipts (ADR's). Which country is not among them?
correct answers Canadian companies do not issue ADR's. They can directly list their common
stocks on U.S. exchanges.
In a limited partnership, what option normally is available to the remaining general partners upon
the death or withdrawal of any one general partner?
` correct answers `disband or file an amendment to partnership agreement
One drawback to the limited partnership structure is the requirement to either disband the
partnership or file an amendment to the partnership agreement upon the admission or withdrawal
of any general partner. This requirement serves public notice to anyone who does business with
the entity, so they will clearly know who is responsible for its management, debts and liabilities.
Which one of the following statements is not an advantage of private investments in public
equities (PIPEs)?
-PIPEs are preferable over a registered offering for a company needing low-cost fundraising.
-PIPEs are typically faster than a registered offering.
-PIPEs allow for direct negotiations with investors.
-PIPEs can lead to dilution of current shareholders. correct answers pipes can lead to dolituion of
current shareholders
A PIPE, or private investment in public equity, refers to a financing arrangement in which
private investors buy shares of publicly traded stock at a discount to the current market price per
share. This type of investment usually takes place when a public company is seeking to raise
capital quickly and is willing to sell its shares at a discount to entice private investors. PIPE deals
are typically arranged between a public company and a select group of private investors, which
can include institutional investors, such as mutual funds and hedge funds, as well as accredited
individual investors. One disadvantage of PIPEs is that PIPEs often offer shares at a discount
which can lead to dilution of current shareholders. Please refer to the key concepts document for
a list of advantages and disadvantages of PIPEs.
, Which type of trust is not permitted to participate as an owner of an S corporation?
revocable trust
testamentary trust
living trust
charitable remainder trust correct answers Most types of trusts are permitted to own S
corporation stock, often with time limits or restrictions. For example, living and testamentary
trusts can own S corporation stock for a period of time after the death of a trust grantor.
However, charitable remainder trusts (CRTs) are not permitted to own S corporation stock.
The Millers are a married couple who own the following assets: A first home worth $2 million
with no mortgage, a second home worth $2 million with a $1 million mortgage, a bank account
worth $1.5 million, and a brokerage account worth $1.5 million. Do they meet the standard for
qualified purchasers (QPs)?
No, because they do not have more than $5 million of investment assets. correct answers no do
not have more than 5mm in investment assets
The SEC defines QPs as individuals or couples who have more than $5 million in investments.
Note that this threshold doesn't measure net worth, real estate or personal property. QPs can
invest in certain types of unregistered private funds.
For purposes of determining who must register with the SEC or a national security exchange
under the '34 Act, the "size requirement" is any company exceeding correct answers The size
requirement for registration with the SEC or with an exchange has two components: 1) number
of shareholders (2,000 or more); and 2) an asset threshold ($10 million or above).
For a broker dealer to qualify for the Rule 139 exclusion of issuer-specific research reports, so
that publishing these reports is not considered an offering, which issuer requirements must be
met? correct answers Two issuer-specific requirements are contained in Rule 139. The issuer
must have filed all periodic reports over the preceding 12 months and the issuer must meet
requirements for using Form S-3 or F-3. Seasoned issuers or WKSIs can meet these
requirements.
An investment banker is asked to differentiate between an indication of interest (IOI) and letter
of intent (LOI) in the context of M&A for a potential client. The banker would be most likely to
state that correct answers an IOI is a non-binding bid at the end of the 1st round, subject to
significant due diligence, while an LOI is a binding bid at the end of the 2nd round with limited
(or no) additional due diligence.
*Depending on the context of a question, an indication of interest (IOI) and letter of intent (LOI)
can sometimes be used interchangeably. However, if asked to differentiate them on the exam, be
sure to know that an IOI is a non-binding bid at the end of the 1st round, subject to significant
due diligence, while an LOI is a binding bid at the end of the 2nd round with limited (or no)
additional due diligence.
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